Company Bankruptcies Rise by 22% in 2024

Company Bankruptcies Rise by 22% in 2024

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The number of company bankruptcies in Austria is expected to rise by 22% in 2024, reaching 6,550, according to the latest forecast from the Credit Protection Association (KSV).

Liabilities – the financial debts and obligations a company owes – are also expected to increase by 31%, reaching a record €18.3 billion. This rise is mainly due to a string of high-profile insolvencies, including those of René Benko’s Signa property conglomerate, motorcycle manufacturer KTM and the Austrian arm of US electric vehicle maker Fisker Automotive.

KSV predicts that bankruptcies will remain stable or rise slightly in the coming year, with an expected range of 6,500 to 7,000.

Rising Impact on Creditors and Employees

The KSV forecast shows that 51,000 creditors (+11.6%) and 30,200 employees (+27.4%) will be affected by company bankruptcies in 2024, setting new record highs.

Ricardo-Jose Vybiral, Managing Director of KSV, explained that the bankruptcies this year were driven by both economic factors and management errors. “The company bankruptcies this year had not only economic causes, there were also management failures,” said Vybiral. He suggested that some of these management mistakes might have been linked to a brief economic upturn in early summer 2023, which may have been overestimated.

No Record for Bankruptcies in 2024

Despite the increase, 2024 will not set a record for the highest number of bankruptcies. That title still belongs to the years 2005 and 2009, when bankruptcies totalled just under or just over 7,000.

“Typically, 1.6 to 2% of all companies go bankrupt. This year, we expect 1.4%. So, the increase must be viewed in relation to the economically relevant companies,” explained KSV insolvency lawyer Karl-Heinz Götze.

On average, about 5,000 company bankruptcies occur each year. While the total number of bankruptcies this year isn’t a record, the size of the insolvencies is increasing, with bigger companies – those with more employees and higher debts – being hit harder, Götze said.

Concerns Over Deindustrialisation

KSV head Vybiral also expressed concern over what he described as a “gradual deindustrialisation” in Austria. While this year’s bankruptcies have mainly impacted the retail, construction and hospitality sectors, he pointed out that the industrial sector is facing particular challenges, with only half of industrial firms expected to make a profit this year.

“The industry is very much shaped by research and development, is highly international, and is a very important driver of our value creation. If that goes, we really have a problem,” warned Vybiral.

Call for Optimism and Reform

Vybiral also expressed concern about the rising pessimism among Austrian businesses. “Currently, there is a pessimism running through companies,” he said. “But we need optimism for the future.”

He emphasised that while companies should focus on improving operations, the next federal government must help by introducing “new impulses,” especially through reducing bureaucracy and simplifying regulations. “Regulation makes sense, but there is too much of it. Companies should be able to focus on their core business without unnecessary obstacles,” he added.

The People’s Party (ÖVP), Social Democrats (SPÖ) and NEOS are currently in talks to form Austria’s first three-party coalition government, following the parliamentary elections in September.

Personal Bankruptcies Remain Stable

Meanwhile, the number of personal bankruptcies has remained steady compared to 2023, with 8,920 reported this year, a slight increase of 0.8%. The average debt per individual stands at €112,000. KSV experts expect the number of personal bankruptcies to rise further in 2025, with up to 9,500 anticipated. “An increase in company bankruptcies usually reflects in the number of personal bankruptcies two to three years later,” explained Götze.

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